Is Bitcoin a Good Investment?: 5 Reasons Why the Answer is "Yes"
Bitcoin. You’re probably sick of hearing it by now. Your work colleagues, friends, and even your grandma just won’t stop talking about the amazing profits they’ve made from Bitcoin (BTC) over the past few years. Yet still, you have not invested. Still, you ask yourself “is bitcoin a good investment?”
Well, the good news is you are not too late. Bitcoin has immense potential and it’s always a good time to enter the market. For those investors or crypto beginners that may feel lost in the world of bitcoin, we are here to say “don’t worry.” We’ll clear up any confusion in this article with five simple reasons why bitcoin is a good investment.
Don’t forget to stay until the end of the article for some bonus content that will help you utilize bitcoin in more creative ways.
Pros and Cons of Investing in Bitcoin
Investors from all backgrounds are flocking to bitcoin as the new, digital store of value. This is not a coincidence and is far more complicated than just a shallow investment trend that will fizzle out. Bitcoin has several advantages for investors and of course, some small disadvantages as well.
Let’s get into it.
Advantages of investing in bitcoin
- Limited supply: 21 million. This is the total number of bitcoins in existence. That number will never change due to the code created by bitcoin’s anonymous founder Satoshi Nakamoto. Unlike fiat money like the US Dollar, bitcoin cannot be duplicated or printed at will. With central banks like the Federal Reserve constantly printing new dollars to cover debts and stimulate the economy, the value of the dollar is inflating as a result and losing value. Due to its supply, bitcoin is immune to inflation and is perhaps its most important advantage.
- Liquidity Many professional traders argue that bitcoin is one of the most liquid investments in the entire world. This is due to its availability on hundreds of trading platforms, cryptocurrency exchanges, and more recently, traditional online brokerages. It’s simple to buy bitcoin using cash online or even at bitcoin ATM’s which are popping up everywhere. Now, it’s even possible to buy Bitcoin using assets like gold with very reasonable fees. The advantages of high liquidity mean it’s easy to enter and exit the bitcoin market quickly and efficiently. Orders are usually filled instantly, regardless of size.
- Volatility: Some may think a volatile asset is one not worth investing in due to the extremely high risk. Have you heard the term “high risk, high reward” though? Bitcoin fits that description. Bitcoin is highly volatile in the short term with price swings often moving in double digits percentiles within hours. Yet, in the long term, bitcoin is a fairly safe investment as it’s only risen in value since its introduction in the late 2000s. For those looking to get rich quick though, please take caution as the volatility could easily put you at a loss if you are not careful. Trading bitcoin should be left to the professionals.
- Trading made easy: While trading bitcoin is a risky endeavor and difficult by nature, accessing bitcoin trading features is the opposite. To trade stocks on a professional level requires a unique certificate or license. Then, one must go through a broker that allows one to trade the company’s shares. There are many steps and obstacles to get through. With bitcoin trading, however, it’s an extremely minimalistic process that requires signing up to one of many crypto exchanges and depositing bitcoin. With instant transactions, bitcoin trading is lightning fast and can even develop into a full-time career given the market operates 24/7.
Disadvantages of investing in bitcoin
Volatility: As described earlier up above, bitcoin’s price always moves in waves, sometimes extremely violent ones. For example, if one bought bitcoin in mid-April 2021, they would have bought BTC for around $63,000. If they sold a few weeks later, the price was around $34,000, generating a nearly 50% loss. Bitcoin’s price eventually recovered to $63,000 (and beyond) but these short-term volatile swings are a great example of the damaging risk on the market.
A target for scammers: Wherever there are large amounts, criminals are never far away. Bitcoin is no different. Due to the enormous wealth potential bitcoin provides, many people have come into life-changing profits. However, this also means they are at high-risk for scammers attempting to phish information that may lead to their crypto exchange password, private wallet keys, or more. If you’re investing in bitcoin, don’t tell everyone you know and of course, always quadruple-check any request from anyone asking for your username, password, or any private information. Cryptocurrency can be very safe... if you’re careful. So always stay alert.
Not great for spending: Bitcoin is technically a cryptocurrency but ironically enough, it does not make that good of a currency. Currency should have a stable value. Otherwise, item prices will be in constant fluctuation every hour. There are indeed vendors that accept bitcoin as a payment method but really, it’s not very inefficient. What bitcoin does best acts as a supreme store of value? Park your fiat money into bitcoin and watch it grow over the years to new heights. That’s what it’s for!
Is bitcoin the future of money?
Is bitcoin the future of money? It’s certainly trending in the right direction. The world’s top institutions and companies are starting to add bitcoin to their balances sheets and even entire countries like El Salvador are making bitcoin legal tender. Suffice to say, bitcoin has moved well beyond the “fad” part of its evolution. So what’s next?
Bitcoin is far from the top. Its extreme volatility still suggests a maturation process is still in effect. Also, China’s “ban” on bitcoin left many around the world questioning the legitimacy of this technology and worried if other countries would follow. India once banned bitcoin but recently announced plans to reintroduce it through regulation.
The U.S.A. government is also one that’s investigating bitcoin regulation heavily. Head of the Securities and Exchange Commission Chairman Gary Gensler recently admitted that
“currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending.”
Frankly, Gensler is right. While the industry has made tremendous strides to prove its legitimacy, it’s still extremely “free and wild.” While that may be a good thing for many participants, from a government standpoint, it’s understandable to see why they are concerned about letting this new technology expand and run rampant unimpeded.
“Doomsdayers” often say more regulation means the end of cryptocurrency as we know it but that’s simply not true. Instead, more regulation means more opportunities for the world to access financial markets and services. The future of finance looks like this. Two streams of thought: the traditional and the decentralized. Both will work together, running parallel to each other and bringing benefits to both sides. Fiat is not going away. Neither is cryptocurrency. Both will help one another improve to bring increased financial freedom to the world. This is the next industrial revolution. Will you be a part of it or observe from the sidelines?
Bonus content: do more with your bitcoin
Hopefully, you learned a thing or two about bitcoin from this article and perhaps even bought some of it yourself. Now that you’re in the new club, why not explore further avenues that can help you grow that portfolio even more? YouHodler has a wide array of innovative features to help you HODL BTC and “stack sats.” For example:
- Buy Bitcoin: Buy BTC using fiat, stablecoins, or exchange via other cryptocurrencies. Low fees included!
- Earn BTC: Deposit BTC in our bitcoin savings accounts and earn 4.8% per year with weekly interest earnings.
- Bitcoin loans: Don’t sell your BTC. Use it as collateral for an instant cash loan and benefit from the growth of your Bitcoin later.
- Multiply BTC: Try our original features Turbocharge and Multi HODL. Play with market volatility to long or short BTC and multiply your Bitcoin. This is Bitcoin trading made easy!
Visit us at YouHodler.com or download the iOS or Android app today to get started.